Got a Great Idea But Not the Time (or Means) to Develop a Product?
Entrepreneur's New Year’s Guide
The idea engine keeps inventors, innovators and entrepreneurs in business. “Successful inventors accumulate over a thousand ideas in the course of bringing a creative concept successfully through the innovation process from an idea to market reality,” Penn State professor Jack Matson wrote in his book Innovate or Die.
Yet ordinary people also generate a steady flow of ideas from their everyday experiences. Daniel Burrus, in a blog post on The Huffington Post, suggested that useful ideas can come not only from inventors, innovators and entrepreneurs but also from anyone with in-depth knowledge or experience of a subject matter or domain.
On the heels of successful TV programs such as Shark Tank, Damon D’Amore created the Beverly Hills-based WayFounder, born out of the idea that not all idea generators desire to become CEOs of a startup. During a recent Money Talk radio interview, he explained to me that in his experience, many people have ideas "but very few wanted to take the life risk inherent in going to try to launch a startup.”
“Good ideas come from everywhere," D’Amore wrote on the WayFounder blog. "However, for most people, without a full-time commitment there are few great options for turning their ideas into a successful product or business.” So he created WayFounder to serve those with a great idea but no domain expertise or people with domain expertise but no desire or time to launch a startup.
“Say you are a high school track coach but you have an idea for a great dog toy," said D’Amore."Wonderful!” I'd like "to give you cash right now and reward you for your idea.”
D’Amore will provide funding to domain experts in the dog-toy category -- people who know how to design, produce and market dog toys. If the product is successful, the idea generator will be rewarded with royalties and a stake in the company.
WayFounder receives ideas through a quarterly competition; the ideas for products and apps are evaluated by a panel of judges (from various industries) according to specific criteria.
Each quarterly competition has at least one winner, who's granted a $10,000 cash prize, as much as $50,000 to bring that product to market and a 5 percent royalty fee on all sales (if the product makes it to market).
If the product is successful, WayFounder will invest an additional $250,000 to hire an experienced CEO to build the business from producing the single product into a viable and sustainable operation. The inventor receives 5 percent founder equity in the new company.
While many crowdsourcing platforms and shows require inventors to share their ideas with the public, at WayFounder the ideas are vetted by industry professionals with domain expertise and ideas are kept private. Only the WayFounder team and the judges view the submissions.
WayFounder provides a cash payment up front. When the product reaches the market, WayFounder provides revenue-sharing and equity participation.
With WayFounder focused on early-stage ideas, a participant might have a concept but not have invested any meaningful time or money in its development. These participants don’t have the luxury of dropping everything in life and committing full-time to building a business.
Entrepreneurs may take issue with WayFounder’s business model, seeing it as a way of making off with great ideas at a fraction of their true value.
D’Amore defends WayFounder’s business model, noting that some idea generators may also be entrepreneurs. “Other folks are just great idea people," he said. "And if you are not an entrepreneur, it’s OK to say, ‘I’m an idea generator.’"
Although crowdfunding sites can provide entrepreneurs with money to finance projects, the challenge for many is that they are left on their own to figure out how to bring a product to market. The hurdles faced by the inexperienced can include figuring out how to obtain legal protection, identify manufacturers, build websites, develop necessary technology and create a marketing and sales plan.
D’Amore believes that as many crowdfunding efforts fail because would-be entrepreneurs don't fully understand what it takes to start a company. “People who don’t know anything about fulfillment, delivery, manufacturing -- they go over their costs. They think they can just call somebody in China, order a product, and it just magically appears here.”
To get WayFounder off the ground, D’Amore raised venture funds last year (to support its operations, competitions, investing in winning ideas and funds scaling those ideas).
In mid-August, WayFounder announced the winners of its first quarterly competition. in the home and garden category, a mobile app idea for brides and a parenting product.
As the late comedian Robin Williams once said, “No matter what people tell you, words and ideas can change the world.” D’Amore and WayFounder have created a mechanism that provides everyday people with a platform to put their ideas into action and change the world – while earning a reward for their effort.